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PIA Files Testimony for Three Congressional Hearings in Three Days on Capitol Hill

WASHINGTON – The insurance industry is strong but faces ongoing challenges, according to the National Association of Professional Insurance Agents, which released testimony for three congressional hearings held over three days on Capitol Hill...
April 28, 2015

WASHINGTON – The insurance industry is strong but faces ongoing challenges, according to the National Association of Professional Insurance Agents (PIA), which released testimony for three congressional hearings held over three days on Capitol Hill.

On Tuesday, April 28, the Senate Banking Committee held a hearing entitled, “The State of the Insurance Industry and Insurance Regulation.” Then, on Wednesday, April 29, the House Financial Services Committee Housing and Insurance subcommittee scheduled a hearing entitled, “The Impact of International Regulatory Standards on the Competitiveness of U.S. Insurers.” Finally, a hearing was set for Thursday, April 30, in the Senate Banking Committee on Securities, Insurance and Investment subcommittee on “Examining Insurance Capital Rules and FSOC Process.”

“While the state of the insurance industry is strong, there are also challenges and issues that need to be addressed,” stated PIA. PIA also cautioned against imposing bank-centric standards on insurance entities. “While banks and other financial institutions profit by actively seeking out risk, insurance companies profit by insuring against risk,” the PIA testimony states. “Therefore, it is not prudent to attempt to apply bank-centric standards to insurance entities, as they are completely different.”

“The built-in checks and balances of the state-based regulatory system ensure transparency and accountability,” it added. “PIA believes the same standards should apply to federal offices and commissions, such as the Financial Stability Oversight Council (FSOC); the Federal Insurance Office (FIO); and international organizations, such as the International Association of Insurance Supervisors (IAIS), in which the FIO and Federal Reserve are involved.” PIA supports legislation that would require consultation with Congress, the insurance industry and consumers with respect to domestic and international insurance standards, negotiations, regulations or frameworks.

“While perhaps not contemplated at the time, the 2010 passage of the Dodd-Frank Financial Reform Act has had a profound impact on insurance regulation. Under the Dodd-Frank Act, the FSOC has the power to designate ‘systemically important financial institutions’ (SIFIs). PIA has ongoing concerns regarding the level of transparency in the FSOC decision-making process and supports the important role that state-based insurance regulation plays in maintaining competitive markets and protecting consumers.”

The Dodd-Frank Act also created the FIO, which stipulates that the FIO is not an insurance regulator. PIA agrees with this prudent restriction and believes that the FIO should have no role concerning insurance regulation.

PIA supports a modernized state-based insurance system and opposes any federal regulation or international standards that would destabilize or supplant state-based regulations. To this end, PIA has endorsed the Policyholder Protection Act (S. 798), which would better empower state insurance regulators to protect policyholders in their state by ensuring that insurance companies structured under larger financial firms are not held financially responsible for an affiliated bank’s failure or financial crisis. Furthermore, S. 798 ensures that state regulators, and not the Federal Deposit Insurance Corporation (FDIC), have the power to appropriately manage a troubled insurer for the best interest of policyholders.

In addition, PIA argued forcefully for transparency and accountability in ongoing international negotiations and spoke in opposition to any federal or international actions that seek to limit input in the deliberative process.

PIA looks forward to continuing our engagement with Congress on these important issues in the months ahead and thanked both committees for holding these hearings.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street AmericaSM. PIA’s web address is www.pianet.com.

Full text of PIA testimony:
Senate Banking Committee, Apr. 28, 2015
House Financial Services Committee April 29, 2015
Senate Banking Committee April 30, 2015

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